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Vietnam Mechanics: Pressure To Innovate Technology, Welcome Opportunities From FDI

07/12/2021

There are not many opportunities between FDI enterprises and private enterprises for science and technology to spread and support each other.

Connecting FDI enterprises and domestic enterprises

Research by the Department of Business Development (MPI) shows that the link between FDI and domestic enterprises is still limited.
Vietnamese enterprises mainly participate in simple stages: processing and assembly with low added value, low sustainability, low localization rate (30-40%).

In this regard, Mr. Park Hongook, General Director of Doosan Vietnam Heavy Industry Co., Ltd. said that Vietnamese enterprises have not really closely linked together in production and business activities.

There are not many opportunities between FDI enterprises and private enterprises for science and technology to spread and support each other. Sharing the same opinion, Mr. Nguyen Hoang Diep, representative of KIMSEN Industrial Joint Stock Company, assessed: “Customers need components with competitive prices, but Vietnamese enterprises offer each type of discrete components. It will be very difficult for us to get them to cooperate with us.”

On the other hand, according to many experts, FDI enterprises investing in Vietnam mainly take advantage of favorable policies as well as cheap labor without transferor technology or supporting development for domestic enterprises.

Vietnam is attracting a lot of foreign investment capital, but the transfer and absorption of technology from FDI enterprises by domestic enterprises is still very limited, because domestic enterprises have not made the necessary preparation. ready to accept new technology. Moreover, Vietnam’s FDI attraction policy is still following the “carpeting” trend, but there are no conditions that bind FDI enterprises to be responsible for technology transfer or development support for domestic enterprises.

Effectively promote FDI capital in the field of mechanical engineering

Experts also said that, at the national level, Vietnam does not have a specific plan or strategy to promote the interaction and linkage between FDI enterprises and domestic enterprises. The number of technology transfer projects between FDI enterprises and domestic enterprises is very rare and is carried out locally between enterprises or localities.

In order to create a resonance between FDI and local businesses, Dr. Huynh Thanh Dien, Nguyen Tat Thanh University, said that it is necessary to have policies to promote FDI enterprises to develop satellite supply networks with local small and medium enterprises; at the same time, implementing policies to help local businesses improve their governance capacity, bring a global mindset about standards, markets, technology, human resources, etc. to be able to link with FDI and join the global supply network.

For private enterprises to become partners of foreign investors, Vietnam needs to create the best conditions and business environment for the domestic private sector to develop.

Experts also said that the mechanical engineering industry needs new attractive incentives to make better use of FDI inflows for economic development, create linkages with domestic enterprises and increase added value for the domestic economic sector.

The mechanical industry is a more difficult field to start up than other industries, so the State needs to nurture even “sponsor” for mechanical enterprises, especially when they have bravely chosen this difficult field. That has to be done as soon as they are in their infancy. If this group of businesses together with the equitized business block are interested in promoting, we hope to have many inventions and achievements in the future mechanical field.

Mechanical enterprises that are attached and passionate about the profession actively propose or are assigned scientific research projects by the State to have many high-tech, environmentally friendly products put into service for industrial production. agriculture and industry is not much.

Mechanical enterprises improve their capacity, welcome the “wave” of integration

According to the Ministry of Industry and Trade, Vietnam currently has about 25,000 mechanical enterprises, accounting for 30% of processing and manufacturing enterprises. However, the enterprises in this industry are mainly small in scale, with low competitiveness and difficulty in competing with imported products. Therefore, the mechanical engineering market share in the domestic market still largely belongs to foreign enterprises. Mechanical products, human resources… are inferior to other countries in the region. The connection between Vietnamese mechanical enterprises is still limited; Market-making factors, regional linkages, human resources, etc. are still weak.

Not only that, mechanical enterprises in Vietnam also face many challenges in improving technology, catching up with trends, improving labor skills, corporate skills, and improving infrastructure and quality facilities to be able to join the global supply chain. This will cause many businesses to lose their development opportunities when the “wave” of FDI enters our country.

In the development orientation, Vietnam’s mechanical industry not only aims to meet the needs of the domestic market, but also aims to promote exports. But will this “dream” come true when the products of Vietnam’s mechanical industry currently have low competitiveness, products with high technology content bearing “Vietnamese brands” are not many?

According to Deputy Director of the Department of Industry (Ministry of Industry and Trade) Pham Tuan Anh, the mechanical industry is facing relatively fierce competition with imported products. Market expansion still faces many difficulties due to lack of market information and weak domestic competitiveness.

Regarding competitiveness in the market, Mr. Tran Van Tuan, General Director of Vietnam Steel Structures and Lifting Equipment Joint Stock Company (Vinalift), commented that businesses need to create a market by raising improve product quality, create products with competitive prices, focus on marketing (which is weak for Vietnamese mechanical enterprises) to introduce products. Along with that, develop design, manufacturing and management standards in accordance with international and regional standards. In addition, businesses should choose a few products with intensive research and production, strengthen mutual cooperation to avoid spreading investment.

Dao Phan Long, Chairman of the Vietnam Mechanics Association, said that if Vietnamese mechanics want to have many orders and join the export chain, they need to innovate equipment, technology, and science and technology level to have can manufacture spare parts, components and machine parts according to orders of foreign partners with diverse categories.

Without the support orientation of the State, it will be extremely difficult, especially the mechanical industry is an industry with very difficult technology, large investment capital, but slow capital recovery, requiring a high level of science and technology as well as knowledge, skills, labor discipline from employees; The industry’s products are not easily distributed and consumed like products of many other industries.

It is very necessary to support Vietnamese businesses to connect to the global supply chain and improve their production and business capacity. In the future, the mechanical industry requires the development of materials, molds, and fabrication, not just simple machining.

Particularly in the field of materials, people have also seen that the world is moving towards new ultra-small materials and components according to Nano technology. This means, world mechanics have been working to create high-quality, smart, durable manufacturing materials that meet new manufacturing processes. From the demand for Nano micro materials, requires the mechanical industry to develop unlimited intelligent manufacturing systems (Intelligent Manufacturing Systems – IMS). Thus, computerization and intellectualization of all stages of production and circulation, not to mention mechanical products, must also increase awareness of environmental protection, especially in the context of global climate change.

Mechanical engineering technology is inherently a competitive advantage of each country. Therefore, industrialized countries such as the US, Germany, Japan, Korea, etc., keeping technology secrets is natural. Competition does not stop between countries, but gradually large corporations have and will transfer part of their technology in the context of globalization. The Vietnamese government must also be very clever in negotiating when licensing FDI projects in the near future. Currently, the process of international assignment and globalization of technology is taking place strongly. Vietnamese mechanical enterprises need to recognize the above trends, actively cooperate, create breakthroughs in science and technology, develop their own competitiveness.

In the coming time, Vietnam will implement many important projects with a large total investment such as: Electricity planning period 2021 – 2030, high-speed railway, Long Thanh international airport, railway routes inner city, traffic works, irrigation, hydroelectricity, oil and gas, marine economy, shipbuilding, automobiles, motorcycles, healthcare, agriculture…. This is a great opportunity for the mechanical industry to take advantage of the advantages and combine the application of 4.0 technology into production.

On the other hand, Vietnam’s participation in many free trade agreements will help domestic enterprises have more advantages when exporting to other markets, and at the same time attract foreign investment into Vietnam. This is considered an opportunity for domestic mechanical enterprises to improve production capacity. However, to take advantage of this opportunity, businesses need to urgently have a detailed plan to link in the production and supply of equipment and machinery manufactured by Vietnamese enterprises, soon forming business clusters. to invest in expanding production to meet new requirements.

Source: Vietnamnet

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Contact MTA Vietnam 
☎ +84 28 3622 2588 
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----//
Considered as a trusted business platform for engineering and manufacturing community. MTA Vietnam 2022 was honored to accompany with SODICK Vietnam in order to showcase their advanced machines and technologies to the Vietnamese market. Lets quickly review SODICK Vietnams shairing at this years exhibition! 

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    ✨ Watch here: bit.ly/3o11dsl

    Contact MTA Vietnam
    ☎ +84 28 3622 2588
    📨 [email protected]
    🔎 Website: www.mtavietnam.com
    #MTAVietnam #MTAVietnamserries #MTAVietnam2022 #MTV2022
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✨ Xem tại đây: https://bit.ly/3nZBtfN
-----//
After a hard week, MTA Vietnam 2022 has officially closed with more than 100 articles from newspapers and media reporting on the exhibition, we would like to thanks for your interest and introduction about us, please click the link below to follow, please click the link below to
✨ Watch here: https://bit.ly/3o11dsl

Contact MTA Vietnam 
☎ +84 28 3622 2588 
📨 mtavietnam@informa.com 
🔎 Website: www.mtavietnam.com  
#MTAVietnam #MTAVietnamserries #MTAVietnam2022 #MTV2022

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    1 month ago
    MTA VIETNAM

    TRIỂN LÃM VÀ HỘI THẢO QUỐC TẾ LẦN THỨ 19 VỀ MÁY CÔNG CỤ, CƠ KHÍ CHÍNH XÁC VÀ GIA CÔNG KIM LOẠI SẼ DIỄN RA TỪ NGÀY
    📍 04 - 07/07/2023
    🎯 SECC, Quận 7, Tp. Hồ Chí Minh

    Hẹn gặp mọi người vào năm sau!
    ----------//
    THE 19TH INTERNATIONAL PRECISION ENGINEERING, MACHINE TOOLS AND METALWORKING EXHIBITION & CONFERENCE

    📍 04 - 07/07/2023
    🎯 SECC, District 7, Ho Chi Minh City

    See you next year!

    Contact MTA Vietnam
    ☎ +84 28 3622 2588
    📨 [email protected]
    🔎 Website: www.mtavietnam.com

    #MTAVietnam #MTAVietnamserries #MTAVietnam2023 #MTV2023
    ...

    TRIỂN LÃM VÀ HỘI THẢO QUỐC TẾ LẦN THỨ 19 VỀ MÁY CÔNG CỤ, CƠ KHÍ CHÍNH XÁC VÀ GIA CÔNG KIM LOẠI SẼ DIỄN RA TỪ NGÀY 
📍 04 - 07/07/2023 
🎯 SECC, Quận 7, Tp. Hồ Chí Minh

Hẹn gặp mọi người vào năm sau!
----------//
THE 19TH INTERNATIONAL PRECISION ENGINEERING, MACHINE TOOLS AND METALWORKING EXHIBITION & CONFERENCE

📍 04 - 07/07/2023 
🎯 SECC, District 7, Ho Chi Minh City

See you next year!

Contact MTA Vietnam 
☎ +84 28 3622 2588 
📨 mtavietnam@informa.com 
🔎 Website: www.mtavietnam.com  

#MTAVietnam #MTAVietnamserries #MTAVietnam2023 #MTV2023
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